Lutnick Pushes Taiwan to Help U.S. Manufacture Half Its Chips Domestically

Published: 01 Oct 2025

Author: Precedence Research

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The Trump administration is seeking to negotiate with chipmaker Taipei to shift its investment and production to the U.S. They aim to manufacture 50% of chips in the U.S., which could enhance Taiwan’s national defense. Washington has been in discussions with Taipei to offer 50-50% splits for semiconductor production, which would mitigate America's overdependence on Taiwan. U.S. Secretary of Commerce Howard Lutnick announced this in an interview held over the weekend.

According to the sources, Taiwan produces nearly 90% of the world’s advanced semiconductors, which is a major concern, according to Lutnick, owing to the island nation’s distance from the U.S. and its proximity to China.

Lutnick Further mentioned, “My objective, and this administration’s objective, is to get chip manufacturing significantly onshored — we need to make our own chips. “The idea that I pitched [Taiwan] was, let’s get to 50-50. We’re producing half, and you’re producing half.”  Lutnick is targeting nearly 40% of domestic semiconductor production before the end of Trump’s administration, which would require approximately USD 500 billion in local investments.

The world’s highly advanced semiconductor contract chipmaker, Taiwan Semiconductor Manufacturing Co., currently handles the entire production of semiconductor chips required by American tech companies like NVIDIA and Apple. Taiwan's crucial geographic position is expected to ensure the island nation’s defense against direct action from China's military, and it is often called as “Silicon Shield” theory. Though Lutnick argued that Taiwan would be safer by offering more balanced chip production for U.S., Lutnick further said on this, “My argument to them was, well, if you have 95% [chip production], how am I going to get it to protect you? You’re going to put it on a plane? You’re going to put it on a boat?”  

According to this agreement, the U.S. would still be reliant on Taiwan, fundamentally, but gain the power to do what they expect to strengthen their national security and defense sector, as argued by Lutnick. Beijing is considered a democratically governed island by Taiwan, as it is their own territory, although Taipei’s recent ruling party has firmly rejected such claims.